&lt;P&gt;In a first step to understand the mechanisms for the SCGB3A2's anti-inflammatory and growth factor activities, and how SCGB3A1 and SCGB3A2 expression relate to each other, we analyzed promoter activity of the mouse SCGB3A1 and SCGB3A2 genes using various techniques such as transient transfection analysis, gel mobility shift analysis, chromatin immunoprecipitation, reverse transcriptase-polymerase chain reaction (RT-PCR), quantitative RT-PCR, and the RNAi technique.&lt;/P&gt; &lt;P&gt;We found that mouse SCGB3A2 gene expression is regulated by a transcription factor CAATT/enhancer-binding proteins (C/EBP) alpha and delta in synergistic interaction with the homeodomain transcription factor NKX2-1. Simultaneous expression of the three transcription factors allows their synergistic interaction to activate mouse SCGB3A2 gene transcription in lung. On the other hand, the mouse SCGB3A1 gene is regulated by a ubiquitous transcription factor NF-Y, and the lung-specific expression of SCGB3A1 is associated with DNA methylation of the promoter. Thus, methylation of the SCGB3A1 gene promoter appears to play a role in tumor and/or tissue-specific expression.&lt;/P&gt;&lt;P&gt;In order to determine whether C/EBPs are indeed critical for the &lt;I&gt;in vivo&lt;/I&gt; expression of SCGB3A2 in lung, we used doxycycline-inducible lung-specific A-C/EBP mice, which express a dominant negative form of C/EBP (A-C/EBP) in lung only when mice are fed doxycycline. A-C/EBP heterodimerizes with all three C/EBPs (alpha, beta, and delta) and interferes their bindings to DNA, thus inhibiting activities of all three C/EBPs. The use of A-C/EBP is critical to understand the role of C/EBP in the expression of SCGB3A2 in lung because all three C/EBPs are expressed in lung and a lack of one form may be supplemented by the others.&lt;/P&gt;&lt;P&gt;After doxycycline diet for 4 months, A-C/EBP carrying mice expressed high levels of A-C/EBP, while the level of SCGB3A2 expression was reduced in relative to control as expected from the &lt;I&gt;in vitro&lt;/I&gt;studies. Interestingly, the expression of the prototypical member of the SCGB gene superfamily, SCGB1A1, was not reduced in A-C/EBP mice as compared to control even though the previously published &lt;I&gt;in vitro&lt;/I&gt;studies demonstrated the importance of C/EBPs in SCGB1A1 gene regulation. We found that this was due to increased expression of the transcription factor FOXA1 both at the mRNA and protein levels. In the presence of C/EBP, FOXA1 only weakly affected SCGB1A1 transcription. These results suggested the importance of &lt;I&gt;in vivo&lt;/I&gt;study to understand the &lt;I&gt;in vivo&lt;/I&gt;role of transcription factor in the expression of genes of interest.&lt;/P&gt;&lt;P&gt;In order to demonstrate whether SCGB3A2 plays any additional role in lung physiology and/or diseases, we induced lung fibrosis by direct administration of bleomycin (BLM) or PBS as control into mice lungs by intratracheal intubation. After 2 weeks of BLM treatment, at which time fibrotic foci were barely found in their lungs when subjected to histological analysis, the mice were administered daily intravenous injections of recombinant (rm) SCGB3A2 or PBS through the tail vein for one week. At 3 weeks following BLM treatment, fibrosis was observed in a group of mice administered BLM, while almost all mice that received BLM and rmSCGB3A2, or those received PBS did not develop any fibrosis. Increase of collagen fibers as detected by Masson trichrome staining and the increased numbers of macrophages and neutrophils were noted, suggesting that SCGB3A2 may have an anti-fibrotic activity. Lungs of these mice have been subjected to microarray analyses to understand the mechanism of SCGB3A2 action. The &lt;I&gt;in vitro&lt;/I&gt;studies using TGFbeta-induced transformation of fibroblasts to myofibroblasts are also used to understand the SCGB3A2 signaling pathway.&lt;/P&gt;